Durio v. Horace Mann Insurance Co.Durio v. Horace Mann Insurance Co.
Lead Opinion
11 This writ application arises from Plaintiffs claims for property damage to her home following Hurricane Rita and for damages and penalties against her homeowner’s insurer pursuant to
FACTS AND PROCEDURAL HISTORY
In September of 2005, Plaintiff, Ginger Hinch Durio (“Ms. Durio”), owned and lived with her three children in a home on East Banbury Drive in Lake Charles, Louisiana. Plaintiffs home was covered by a homeowner’s insurance policy issued by defendant, Horace Mann Insurance Company (“Horace Mann”). The policy provided the following coverage limits: Coverage A (Structure/Dwelling) — $173,300.00; Coverage B (Other Detached Structures)— $17,330.00; Coverage C [¡.(Contents)— $103,980.00; and Coverage D (Additional Living Expenses) — $103,980.00.
On September 24, 2005, Plaintiffs home was damaged by Hurricane Rita. The home had an attached garage, and the majority of the damage occurred when winds dislodged the garage door, causing the main support beam to collapse, resulting in a partial collapse of the garage structure. The extent of damage to the rest of the structure and to the interior of the home was disputed, other than water damage caused when a hot water heater in the attic overturned. Ms. Durio was in the process of a divorce at the time of the hurricane, and obtained ownership of the home through the community property settlement. Due to financial difficulties, she had recently signed a contract to sell the home. In anticipation of their move, the Durios had packed up many of their belongings and stored them in the garage. When the ceiling inside the garage collapsed, their stored belongings were destroyed.
Ms. Durio filed suit against Horace Mann on June 13, 2006. In her Petition for Damages, she alleged the “dwelling, contents and appurtenant structures [shed] were completely destroyed by Hurricane Rita,” but Horace Mann “consistently arbitrarily and capriciously refused to classify [the] home as a total loss.” Ms. Durio asserted bad faith claims under
Plaintiff initiated a claim with Horace Mann on September 27, 2005. On October 1, 2005, Horace Mann issued a $2,500.00 check to Ms. Durio as an advance on additional living expenses (“ALE”). Ricky Fine, an independent claims adjuster | ¡hired by Horace Mann, testified he did a full inspection of the property on October 12, 2005. He noted the garage was severely damaged, and noted some interior damage from the hot water heater. His estimate also allowed for an electrical inspection of the garage and home to assess the amount of damage caused by the garage collapsing. Mr. Fine testified there was no storm related damage to the slab, and he did not believe the house needed to be rebuilt. He opined the structural damage was limited to the garage. The Horace Mann adjuster’s reports dated November 2, 2005, reflect estimated damages of $19,293.70 under Coverage A and $8,217.03 under coverage B. On November 4, 2005, Horace Mann issued a check for damage to the dwelling (Coverage A) in the amount of
Ms. Durio was dissatisfied with the estimate of damages, and insisted the home was a total loss. At the request of Ms. Durio, Horace Mann reinspeeted the property on November 18, 2005. On December 5, 2005, Horace Mann issued a supplemental payment for structural damage (Coverage A) in the amount of $1,572.27, and a check in the amount of $6.99 for contents (Coverage C). Horace Mann subsequently issued additional checks for ALE, each in the amount of $1,950.00, on October 1, 2005, November 1, 2005, December 1, 2005, and January 1, 2006, for a total of $7,800.00. No further payments were made by Horace Mann under Coverages A, B or D.
Because she still disagreed with Horace Mann’s estimation of the extent of damages, Ms. Durio hired an engineer to inspect the property. Mr. Charles Norman, |4P.E., inspected the house on January 21, 2006, and issued a report dated January 26, 2006, in which he opined the house was not livable, and the structural and mechanical integrity of the home was compromised. Specifically, his report provides:
• The upper attic frame is compromised and very unstable. Portions have failed and collapsed from storm related damages.
• The home has distorted in both lateral directions and permanently shifted. The upper frame structure will require significant repair and mitigation before the home is livable.
• The ventilation system was severely compromised due to electrical and water problems related to the storm. Ventilation is a major issue inside the home due to mold and moisture. In my opinion, the home is unsafe to live in.
• There are significant issues with electrical wiring and connections throughout the home. Therefore fire safety is an issue.
• There is a significant loss of mechanical and structural integrity in the home due to hurricane winds. In other words, major repairs will be required to restore the home to a livable condition.
On March 25, 2006, Mr. Norman issued a supplemental report based on his January 21, 2006, inspection. His opinion of the damage remained the same, however he also stated that a comprehensive repair plan should be developed for the home which should be weighed against a complete rebuilding. He made an additional recommendation that at least fifty percent of the entire attic frame should be replaced, with the section over the garage and north of the garage rebuilt from the slab upward. He also stated the slab should be evaluated for movement.
On April 28, 2006, Ms. Durio submitted a “Sworn Proof of Loss,” through her attorney, which was received by Horace Mann on May 5, 2006. In the Proof of Loss, Ms. Durio stated, among other things, that the home was totally destroyed along with all contents, and the damages exceeded the value of coverage provided by the insurance policy. Included with the Proof of Loss were the engineering reports from Mr. Norman; an appraisal of the home dated October 8, 2004; Ms. Durio’s [scompilation of damaged con
Horace Mann hired its own engineer to evaluate the damage to the house. On May 15, 2006, Rimkus Consulting Group issued an engineering report on behalf of Horace Mann. While noting the structural integrity of the attached garage was compromised by wind forces, and acknowledging problems caused by the partial collapse of the garage structure, the report stated repairs could be made to the structures without requiring demolition of the residence. On August 7, 2006, Rimkus issued a supplemental report outlining in more detail the work to be performed as part of the repairs to the residence. On August 16, 2006, Rimkus issued a repair work plan based on its reports of May 15, 2006, and August 7, 2006.
Craig Rogers an expert in civil engineering and forensic engineering, was employed by Rimkus, and inspected the house on November 29, 2006. He testified there was structural damage to the property, and agreed the house presented a safety hazard and was still uninhabitable at the time of his inspection. However, he disagreed with any opinion that there was damage to the slab of the house as a result of the storm. Mr. Rogers performed tests on the slab, as recommended by Mr. Norman, which showed nothing out of the ordinary. Any cracks in the slab were the result of normal shrinkage and were unrelated to the storm. Mr. Rogers opined there was no evidence of any permanent structural deficiencies in the house beyond the garage. In his expert opinion, the house did not need to be demolished, and the Rimkus repair plan would aid whoever repaired the house.
Ms. Durio proceeded to obtain estimates to repair the home pursuant to Mr. Norman’s reports. In May of 2006, Bayou General Contractors prepared an estimate to replace the home totaling $299,200.00. Paul Young of Bayou General Contractors testified there was structural damage to the home, and testified he also took Mr. | r,Norman’s report into consideration when preparing his cost estimate.
On October 4, 2006, Horace Mann reissued checks for Coverages A and B in the amounts of $19,872.96 and $8,217.03. The original checks had been voided by Horace Mann because they were never negotiated. On that same date, Horace Mann issued a check for the full value of the contents (Coverage C) in the amount of $47,061.44.
Ms. Durio obtained a second repair estimate in November of 2006 in the amount of $46,656.00 from Lewing Construction. Ralph Lewing testified the biggest part of damage was to the garage, where the beam collapsed and joists caved in. He noted other minor damage to the exterior and interior of the home. He did not believe the house was a total loss. He found no unusual or storm related damage to the slab.
On January 8, 2007, Rimkus issued another supplemental report after Mr. Rogers’ inspection of the property on November 29, 2006. This report indicated several instances of defects in the original construction of the house, which Rimkus found to be causes of the partial collapse of the garage structure.
Ms. Durio subsequently hired Mr. Ker-mith Sonnier at Cost Control Services as a consultant/public adjuster to inspect that house and provide an adjustment of total losses. Mr. Sonnier’s initial report dated August 16, 2007, showed total losses as follows: $57,776.30 for the dwelling; $16,578.93 for other structures; $45,180.00 for contents; and $10,950.00 for ALE. Mr. Sonnier was accepted by the court as an expert in property adjusting. He testified this initial report was preliminary, and he
In September of 2007, Ms. Durio sold the home to its original contractor, Joe Seago. Mr. Seago testified he encountered Ms. Durio sometime in late 2005, and she asked him to inspect the damages to the home. He testified the house could be repaired for $35,000.00 to $40,000.00. While he agreed there was structural damage, he found no problem with the slab. He purchased the house for $132,500.00, with a plan to repair it and sell it for a profit. He spent $34,681.97 to repair the house to its pre-storm condition. However, this amount did not include adjustments for overhead or profit, or account for Mr. Seago’s labor costs.
Following a bench trial, the court ruled in favor of Ms. Durio. In oral reasons for judgment, the court ordered payment of policy limits on Coverage A, specifically noting he gave greater credence to Ms. Durio’s expert. The court believed Mr. Norman’s evaluation of the structural damage to the house, and based on damage estimates submitted at trial, the court found the house to be a constructive total loss. The court noted the inflationary rider in the policy, adding an additional $10,109.00 of coverage, making the policy value $183,409.00. Subtracting the amount Horace Mann previously paid, the court awarded Coverage A losses of $163,536.97.
The court also awarded penalties relative to Coverage A. The court found formal notice of the losses was mailed on April 28, 2006, and received in Horace Mann’s home office on May 5, 2006. Thus, satisfactory proof of loss was made as of May 5, 2006. The court found it significant that Horace Mann failed to make any |sadditional tenders, even though Horace Mann relied on cost estimates at trial which all exceeded the amounts its adjusters initially proposed. The trial court also stated: “It basically appears that this file was mismanaged. There is missing correspondence. There are missing photographs, unexplained handwritten notes, additional bureaucratic delays with third-party delays with third-party dealings, apparently a rotating door of adjusters all contributed to Horace Mann’s failure to properly adjust this claim.” Thus, the court found Horace Mann was arbitrary and capricious, and failed to deal with Ms. Durio fairly or in good faith, and awarded penalties under
The court also gave more weight to the estimates of damages under Coverage B provided by Mr. Sonnier, rather than that provided by Horace Mann’s adjuster, Mr. Fine. The court found Coverage B damages totaled $16,578.98, and subtracting the $8,217.03 already paid by Horace Mann, the court awarded $8,361.91. While the court noted Mr. Sonnier’s particular estimate was provided to Horace Mann on February 21, 2008, during the course of litigation, it also noted the full extent of the loss was provided in the original proof of claim on May 5, 2006. Thus, the trial court awarded penalties under both
As to Coverage D, the trial court noted Ms. Durio was only paid for four months of ALE, but Horace Mann’s file indicated she was being paid or should be paid for a period of up to six months. The court found it was established that there were health and safety issues making the house unlivable. Further, testimony |fldemonstrated it would be a minimum of six months to a year before the property could be repaired. By its own computations, Horace Mann determined $1,950.00 per month was an appropriate ALE based on the four-month average. The court found ALE losses continued until September of 2007, when Ms. Durio sold the house, and thus awarded an additional twenty months ALE at $1,950.00 per month for a total of $89,000.00. The court did not find there was satisfactory proof of loss under
The trial court also awarded general and special damages as a result of Horace Mann’s breach of its duties under
Relying on its finding that sufficient proof of loss was received by Horace Mann on May 5, 2006, the trial court declined to apply the amended version of
Horace Mann filed a motion for new trial, which was opposed by Ms. Durio. In her opposition, Ms. Durio noted the trial court awarded penalties pursuant to both
Thus, final judgment was entered as follows:
CONTRACTUAL DAMAGES L
Coverage A (loss of residence):
$163,536.97 plus 22:1220 penalties of $327,073.94
Coverage B (other structures):
$8,361.91 plus 22:1220 penalties of $16,722.90
Coverage C (contents):
$0 plus 22:1220 penalties of $5,000.00
Coverage D (living expenses):
$39,000.00 plus 22:1220 penalties of $78,000.00
Total contractual damages $210,898.88
Total penalties $426,796.84
GENERAL AND SPECIAL DAMAGES L
Mental anguish $57,000.00 plus 22:1220 penalties of $114,000.00
Lost wages $17,309.00 plus 22:1220 penalties of $34,618.00
Retirement losses $93,024.00 plus 22:1220 penalties of $186,048.00
Total general and special damages $167,333.00
Total penalties $334,666.00
ATTORNEY FEE
One-third contingency fee 379,905.84
TOTALS
Contractual damages 210,898.88
Contractual penalties 426.796.84
General/speeial damages 167,333.00
General/special penalties 334,666.00
Attorney fee 379.905.84
TOTAL AWARD 1,519,600.56
112Horace Mann appealed the judgment in its entirety, and Ms. Durio appealed the award of general damages. The court of appeal affirmed.
The court of appeal found no error in the trial court’s award of damages under the insurance contract. The court primarily noted the varying reports of damage sustained by the house, and found the trial court evaluated the evidence and made credibility determinations in finding Ms. Durio’s evidence more credible.
[Horace Mann’s conduct was] egregious and included such actions as assigning over eight different adjustors to this claim, facetiously sending Ms. Durio a lone check for $6.99 for loss of contents after noticing a broken flower pot, and relying on the report of an engineer who inspected the house through the photographs and notes of an adjustor. Only when Horace Mann initiated a subrogation action against the builder of the house did the engineer actually visit the premises.
The court reasoned Ms. Durio suffered from anxiety to an extent that she had to take medication, adjust her employment, and seek medical care for a variety of stress-related symptoms.
The court also affirmed the award of $17,309.00 in lost wages and $93,024.00 in lost future retirement benefits for the period of time Ms. Durio was unable to work due to stress-related symptoms caused by the actions of Horace Mann.
The court further found no error in the trial court’s award of penalties. The trial court found satisfactory proof of loss was received in May of 2006. Not only did Ms. Durio send documentation of additional structural damage, but even Horace Mann’s adjustors notified the company that Ms. Durio’s losses exceeded the $19,872.96 Inpayment made in November of 2005. The trial court characterized Horace Mann as having “acted in a dilatory and non-customer service fashion in adjusting or resolving” this claim. The court noted the record supported the factual finding of the trial court that the handling of Ms. Durio’s claim was arbitrary and capricious. Even with adequate information on the increased repair estimates from its own adjustors, Horace Mann refused to tender the undisputed amount of the claim. As to the calculation of penalties, the court cited other cases where courts have awarded
The court further affirmed the award of attorney fees under
Horace Mann filed the instant writ application with this court, which we granted.
DISCUSSION
Horace Mann raises several assignments of error. After full review of the 114record
Calculation of Penalties under
This issue is a question of law involving the correct interpretation of Section (C) of
A. An insurer ... owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.
B. Any one of the following acts, if knowingly committed or performed by an insurer, constitutes a breach of the insurer’s duties imposed in Subsection A:
(5) Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.
C.In addition to any general or special damages to which a claimant is entitled for breach of the imposed duty, the claimant may be awarded penalties assessed against the insurer in an amount not to exceed two times the damages sustained or five thousand dollars, 11swhichever is greater.
(Emphasis added)
Horace Mann argues the trial court erred in calculating
This Court provided a detailed summary of guidelines for statutory interpretation in Sultana Corp. v. Jewelers Mutual Ins. Co., 2003-0360 (La.12/3/03),
The function of statutory interpretation and the construction given to legislative acts rests with the judicial branch of the government. Principles of judicial interpretation of statutes are designed to ascertain and enforce the intent of the Legislature in enacting the statute. The fundamental question in all cases of statutory construction is legislative intent and the reasons that prompted the Legislature to enact the law. When a law is clear and unambiguous and its application does not lead to absurd eonse-
quences, it shall be applied as written, with no further inquiry made in search of the legislative intent. The meaning and intent of a law is determined by considering the law in its entirety and all other laws concerning the same subject matter and construing the provision in a manner that is consistent with the express terms of the statute and with the obvious intent of the lawmaker in enacting it. The statute must therefore be applied and interpreted in a manner that is logical and consistent with the presumed fair purpose and intention the Legislature had in enacting it. Courts should give effect to all parts of a statute and should not adopt a statutory construction that makes any part superfluous or meaningless, if that result can be avoided. Furthermore, the object of the court in construing a statute is to ascertain the legislative intent and, where a literal interpretation would produce absurd consequences, the letter must give way to the spirit of the law and the statute construed so as to produce a reasonable result. The starting point in the interpretation of any statute is the language of the statute itself. (Internal citations removed).
Sultana,
While this issue is res nova in this Court, we note that since its enactment in 1990, it appears Louisiana circuit courts consistently applied
A comparison of the wording of
Further, as this Court recently noted,
Thus, following proper guidelines of statutory interpretation, and being mindful that statutes subjecting insurers to penalties are considered penal in nature and should be strictly construed,
In this case, Ms. Durio was awarded damages of $167,833.00 as a result of Horace Mann’s breach of its duties under
Application of the Amended Version of
We next consider whether Ms. Du-rio is entitled to attorney fees pursuant to
Horace Mann argues this Court previously determined in Sher v. Lafayette Ins. Co., 2007-2441 (La.4/8/08),
By contrast, Ms. Durio argues the trial court’s decision to apply the amended version of
Our decision in Sher made clear that the 2006 amendments to
Based on the record in this case, we find no basis to apply the post-amendment version of
The record clearly shows that Ms. Durio asserted her house suffered extensive damages resulting in a total loss shortly after she initiated a claim with Horace Mann. Further, Mr. Norman’s January and March, 2006, reports detail extensive structural damage to the house, and Ms. Durio’s Sworn Proof of Loss submitted in April of 2006 states that the home was totally destroyed. Moreover, Ms. Durio’s Petition for Damages filed on June 13, 2006, asserts that the house was completely destroyed by Hurricane Rita, but Horace Mann refused to classify the home as a total loss. Additional information provided to Horace Mann relative to costs to repair and/or replace the house does not equate to new damage, nor does it change the fact that the house was a total loss from the beginning of the claim. Further, we do not find the | ^reinspection of the property initiated by Horace Mann in November of 2006 created a new cause of action.
Based on our decision in Sher, the amended version of
For the above reasons, we hold that the lower courts erred in calculating
We also hold the lower courts erred in applying the amended version of
In all other respects, the rulings of the lower courts are affirmed.
AFFIRMED IN PART; REVERSED IN PART; AMENDED IN PART.
Notes
. These statutes were renumbered pursuant to La. Acts 2008, No. 413 to
.
. Durio v. Horace Mann Ins. Co.,
. The court of appeal cited Morrell v. Fisher,
. Durio v. Horace Mann Ins. Co., 2011-0084 (La.7/1/11),
. We decline to address the other assignments of error raised by Horace Mann.
. See, e.g., Harris v. Fontenot,
. This Court granted writs in Wegener to resolve the issue of calculation of penalties under
. In Buffman, Lafayette Insurance Company has filed a writ application in this Court challenging the Fourth Circuit’s ruling on this issue.
. Prior to its amendment on August 15, 2006, the statute provided for a twenty-five percent penalty.
. Theriot v. Midland Risk Ins. Co., 95-2895 (La.5/20/97),
. We have determined that penalties under
. The statute provided, in pertinent part: B. (1) Failure to make such payment within thirty days after receipt of such satisfactory written proofs and demand therefor or failure to make a written offer to settle any property damage claim, including a third-party claim, within thirty days after receipt of satisfactory proofs of loss of that claim ... when such failure is found to be arbitrary, capricious, or without probable cause, shall subject the insurer to a penalty, in addition to the amount of the loss, of twenty-five percent damages on the amount found to be due from the insurer to the insured, or one thousand dollars, whichever is greater, payable to the insured, or to any of said employees, or in the event a partial payment or tender has been made, twenty-five percent of the difference between the amount paid or tendered and the amount found to be due.
.The amended statute provides, in pertinent part: B. (1) Failure to make such payment within thirty days after receipt of such satisfactory written proofs and demand therefor or failure to make a written offer to settle any property damage claim, including a third-party claim, within thirty days after receipt of satisfactory proofs of loss of that claim ... when such failure is found to be arbitrary, capricious, or without probable cause, shall subject the insurer to a penalty, in addition to the amount of the loss, of fifty percent damages on the amount found to be due from the insurer to the insured, or one thousand dollars, whichever is greater, payable to the insured, or to any of said employees, or in the event a partial payment or tender has been made, fifty percent of the difference between the amount paid or tendered and the amount found to be due as well as reasonable attorney fees and costs. (Emphasis added)
Concurrence Opinion
additionally concurs in part.
IT concur in the majority opinion but would have addressed the other assignments of error.
Concurrence Opinion
concurring in part and dissenting in part.
Although I concur with the majority opinion’s interpretation and application of the penalty provisions contained in